In their hundreds they stand in line, waiting to pay tribute to their hero. Girls with iPods, skinheads in leather jackets, elderly women with shopping trollies and tanned athletic types in Prada sunglasses shuffle silently forward.

"We wanted the kids to feel the enormity of the occasion. After all, he is our Lady Di and this is our 9/11," says Anton Krem, 45, who is here to pay his last respects to Jörg Haider, the Austrian rightwing populist politician who died in a drunken, high-speed car crash a week ago and whose coffin sits on a pedestal in the Landhaus, seat of Carinthia's regional parliament, the southern province where he was governor.

An after-work crowd of about 300 makes its way through an avenue of huge wreaths. Everyone from the Chamber of Carinthian Chemists to the regional tourist board has sent a display. Klagenfurt, the state capital, is busy preparing itself for today's ceremony, the most emotional state funeral since that of the last Austrian empress, Zita von Bourbon-Parma, in 1989.

Amid a sea of red candles one teenager has written: "To a great man of the nation who fought for his land. Our hero, our fighter, our sunshine." Another note reads: "Our king of hearts". Slipped in between are pictures of Haider, an orange sweater - the colour of his breakaway Alliance for the Future of Austria party (BZO) - draped over his shoulders, glass of beer in hand; another shows the maverick fascist bungee jumping off a bridge.

Behind the scenes, functionaries and volunteers have been working around the clock sending invitations. Austria's political elite are expected to attend tomorrow. But the 50,000 mourners are also expected to include Belgian nationalist Filip Dewinter, French extremist Jean-Marie le Pen, Alessandra Mussolini, the granddaughter of the Italian wartime fascist leader, Umberto Bossi from Italy's Northern League, Swiss industrialist Christoph Blocher, and a handful of Waffen-SS veterans, whom Haider once described as "men of character". Younger far-right figures have also hinted they will turn up, though Austrian intelligence is on alert to turn away groups of skinheads or neo-fascists, to stop the event turning into a rally.

With state broadcaster ORF planning live coverage, President Heinz Fischer, who will give the main speech, and other politicians have asked for assurances that they will not appear in the same frames as anyone from the far right. "They realise it could get very embarrassing," says Hans Rauscher, veteran writer for Der Standard newspaper.

The fear gripping the elite shows the extent to which Haider managed to impose himself on Austria's political scene, becoming a figurehead for an array of far-right European groups. Particularly at such a sensitive economic moment, when parallels with 1929 and the great depression are drawn every day, the fear is that the extreme right may seek to exploit the symbolic power of such a gathering.

"The possibilities for a rise of the far right in the light of the financial and economic crisis are there," warns Anton Pelinka, professor of politics at the Central European University in Budapest and author of The Haider Phenomenon.

In fact the extreme right is already in the ascendant in several European countries. In Italy the Northern League is enjoying its place in Silvio Berlusconi's ruling coalition. Blocher's Swiss People's party is the biggest political force in the country, Belgium's Vlaams Belang maintains its strength in Flanders, while in Denmark Pia Kjærsgaard's anti-immigrant Danish People's party is the third largest in the parliament. Racism has risen in Europe in recent years, with polls showing widespread antisemitism and anti-Muslim sentiment.

But the far right does not seem to be finding it any easier to work together. "In the European parliament there's a strong incentive to do this - if you establish a party group you get funds and more opportunities," Pelinka says. "But the far-right parties have contradicting nationalistic narratives and this makes it very difficult to form one group."

"Denmark and the Netherlands suffered under the Nazis so their far-right groups would never consider joining forces with far-right groups from Austria and Germany," says Richard Brem, editor in chief of a Vienna-based online youth culture magazine. The same goes for the far-right movements of Poland and the Czech Republic. Like Bossi and Blocher, the Netherlands' late Pim Fortuyn might well have seen the well-dressed, perma-tanned Haider as a visual model for his own brand of populist politics, but in fact they had little in common beyond their anti-immigrant rhetoric. Fortuyn, who was openly gay, saw himself as a libertarian whose rights were being curtailed by the immigrant Muslim population. Haider's ethos grew out of an old-time fascism, his country's Nazi past and a psychological need to defend the Nazi generation - including his parents - who he thought were unjustly treated after the war.

"Official Austrian state doctrine after the war was that the Allies liberated Austria from Nazi Germany in 1945 and that Austria had been a victim of the Nazis in 1938," says Pelinka. "This overlooks the fact that the percentage of Austrians who participated in the Nazi regime was the same as in Germany. In contrast, Germany was forced to confront its past directly and did so. Austria was not and didn't."

In Germany, Haider - famous for his outbursts lauding SS veterans, his description of Austria as an "ideological miscarriage", his labelling of Nazi death camps as "punishment camps" and admiration for the Third Reich's "sensible employment policies" - could never have achieved the same success.

Haider himself was frustrated in his attempts to form a pan-European far-right club, though he was successful at least in his intention of provoking European leaders after they slapped sanctions on Austria following the electoral success of his Freedom party (FPO) in 2000.

Nonetheless he is credited with having injected new life into far-right politics. "He was one of the first in Europe to grasp that it's not about issues or a rational discourse, but about emotion," says Brem. "He understood that politics was about marketing and you need to be marketing savvy to succeed."

"What Haider did was to bring Austria's SS and Nazi history out of the past and put it in the present and because he was such a charismatic politician he got away with it," says Rauscher. "But his lasting legacy is the way that he poisoned the political atmosphere in Austria in the process."

Throughout Carinthia there is hardly a person who says Haider has not shaken their hand, or bought them a schnapps. Others talk of receiving €100 handouts from him, a campaign which earned him the nickname "Robin Hood", or speak of the time he lowered petrol prices and introduced free kindergartens.

In the Pumpe pub on Benediktiner Platz in Klagenfurt, drinkers sit around whispering about how Haider died. The figure "142" is repeated often. That is the speed (in kilometres an hour) at which he was driving when he crashed his VW Phaeton on Saturday night. The news has by now filtered down that he was drunk at the wheel.

"Some say he was criminal because he was drunk, but that's an insult," says Christa, a 17-year-old who was among the country's new young voters (the voting age is 16), who gave her support to Haider's BZO in elections two weeks ago. "He did so much for everyone."

Does she think he belittled national socialism? "Well, I don't really know what that is," she replies. "If you mean, was he right to lock up foreigners, yes, because people with a criminal tendency have no place here."

The "Lady Di" comparison is repeated often, along with references to James Dean, Austrian rock star Falco and even the Dalai Lama ("for his ability to reach out to everyone", says one man). Many voice their suspicion that Haider was in fact murdered by Mossad, despite the scientific tests that show he was several times over the alcohol limit.

The television newsreader who announced his death ended her report with the message: "Dear Carinthians, I wish you as much strength as you need to get through this," while Haider's right-hand man Stefan Petzner, the new leader of the BZO, said the "sun has fallen from the sky".

"It's not, it's still there," says Carinthian writer Egyd Gstättner, who observed Haider for two decades. He talks in disgust of a "führer cult" surrounding Haider. On Monday morning, like every Carinthian schoolchild, his 10-year-old daughter was told by her religious affairs teacher to fill up a page of her exercise book with a black cross and Haider's name.

One of Haider's last acts was the establishment of what he called a sonderlager - a special camp for old, sick, and criminal asylum seekers, set on an isolated, 1,200-metre-high alpine pasture. He told his voters he planned to "concentrate" Chechens there, enabling the "final goal" of their extradition to be carried out more smoothly. In other countries politicians would be forced to resign over such issues. According to Florian Klenk, deputy editor of news magazine Falter, "In Austria the typical reaction was, "Well, that's just Haider. And actually he's right."

Last month he won 10% of the vote in national elections, following his victory in Carinthian elections last March.

Commentators suggest it is too early to predict the effect Haider's death may have on far-right politics in Austria. Heinz-Christian Strache, his former ally and more hardline successor as leader of the FPO, has not ruled out a merger with Haider's BZO. That would give the combined far-right parties the same strength they had when Austria was ostracised for that very reason eight years ago.

Today's gathering might well set alarm bells ringing that Europe's extreme right is gathering steam at a time of economic turmoil. "Strache, Bossi and Le Pen will do everything to exploit the crisis," says Pelinka. "And they will have some success. But at the moment there is no indication that they can and will be able to get the amount of power Mussolini, Hitler and co enjoyed in the interwar period."

But the real test, Pelinka says, will come if the economic situation worsens and unemployment rises. He will be watching to see the extent to which countries such as Germany - whose high unemployment in the 1930s led to the rise of Hitler - have really changed. "The question is whether we can assume that in the decades since 1945 countries like Austria, Germany and Italy have been able to create a different, more stable democratic political culture."